The debt dates back to the late 1970s when the Shah of Iran paid Britain £650m for 1,750 Chieftain tanks. But only 185 had been delivered when he was toppled in 1979.

The new Iranian government cancelled the order, but Britain kept the cash. In 2009, the Government was told by an international court to pay back the money.

But it hasn't - yet - because of international sanctions against Iran, which prevent payment for military equipment going straight to Tehran.

After meeting the Foreign Secretary on Wednesday, Mr Ratcliffe said: "It is important that the UK honours its international legal obligations, so that Iran can honour its legal obligations."

And he added: "They are separate things, but it's good for the atmosphere if they are all served."

At the moment the atmosphere between the UK and Iran is terrible. And whose fault is that? The Foreign Secretary's - who is supposed to be the UK's top diplomat, unfortunately.

His fellow Brexiteer Michael Gove, who said he didn't know what Mrs Zaghari-Ratcliffe was doing in Iran, didn't help. No wonder Mr Ratcliffe said the comments made him angry.

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Video:Richard Ratcliffe says he had 'constructive' meeting with Boris Johnson

Can you imagine any of the foreign secretaries of recent years - Douglas Hurd, Robin Cook or William Hague, for example - making such a blunder as to suggest Mrs Zaghari-Ratcliffe was "training journalists" in Iran when she was, in fact, on holiday?

Mr Ratcliffe, who has shown the patience of a saint and admirable restraint since Mr Johnson's gaffe two weeks ago, reacted by telling the Foreign Secretary: "I want you to solve this mess created in your name."

Tory backbenchers are not enthusiastic about settling the debt as a means to help bring about Mrs Zaghari-Ratcliffe's early release.

"I think it is important as a principle of public policy that we do not, and do not appear to be, paying ransoms," said Jacob Rees-Mogg.

"I don't think it can be in relation to any particular case. They must make sure they do not break the principle of paying ransoms."

And Andrew Bridgen said: "If we owe any other country money we should always pay it, just as we would expect them to pay any debt to us.

"But this payment must not be in anyway linked to the release of a British citizen, otherwise it would be seen as a ransom and that opens a Pandora's Box and puts UK citizens in danger around the world if countries believe the UK will pay blackmail ransoms.

"As they could have paid back the money at any point since 1979, choosing to do it while there is a hostage does make it look more like a ransom."

Image:Mrs Zaghari-Ratcliffe and daughter Gabriella

That's the Government's dilemma. Another problem is the sanctions against Iran on military equipment.

"This is a long-standing issue," said a Downing Street spokesman. "Legal advisers are exploring the options, and so far have not been able to resolve them.